UK-India Trade Agreement Unveils £6 Billion in Investment and Employment Opportunities
The UK and India are set to take a major step forward in their bilateral relationship with the signing of a comprehensive economic and trade agreement, also known as the Comprehensive Economic and Trade Agreement (CETA) or Free Trade Agreement (FTA). This deal, announced by Prime Minister Keir Starmer and Indian Prime Minister Narendra Modi, is poised to significantly boost economic growth, raise wages, reduce tariffs, and deepen technology collaboration between the two nations.
Economic Growth and Trade Expansion
The deal is projected to increase the UK's GDP by 0.13% (£4.8 billion) and India's GDP by 0.06% (£5.1 billion) annually in the long run. This expansion is expected to result from an increase in bilateral trade by nearly 39%, equal to £25.5 billion per year, due to reduced tariffs and regulatory barriers. India's growing economy, projected to be the third largest by 2035, stands to benefit substantially from expanded market access.
Wage Uplift and Job Creation
The FTA facilitates labor mobility in key sectors such as IT, healthcare, finance, and education. This movement is expected to create jobs and uplift wages. The agreement includes a Double Contribution Convention eliminating dual social security contributions, saving Indian firms and workers more than INR 4,000 crore, thus improving labor benefits and income.
Tariff Reductions
India has opened 89.5% of its tariff lines covering 91% of UK exports, while the UK also cuts tariffs on about 90% of goods from India. This includes immediate import duty reductions of around £400 million for the UK and £220 million for India, increasing to approximately £900 million for the UK after 10 years. These reductions make goods more affordable and provide greater variety for consumers.
Technology and Innovation Collaboration
The deal includes expanded cooperation in technology, defence, and climate under a joint “Vision 2035” roadmap. This framework is expected to strengthen resilience and promote advanced technology partnerships, benefiting startups and innovators on both sides. The UK-India deal creates a foundation for joint innovation in AI, data science, and advanced technologies.
Sectoral and Strategic Safeguards
Sensitive sectors and strategically important domestic industries in India are protected, ensuring sustainable growth and safeguarding India's emerging capabilities.
In conclusion, the UK-India trade deal represents a comprehensive and mutually beneficial agreement designed to deepen economic ties, enhance trade and investment flows, improve labor conditions, and foster collaboration in emerging technology sectors, supporting long-term growth for both economies. The benefits of this deal are expected to reach every region and nation of the UK, with working communities projected to see tangible economic impact.
- The enhanced cooperation in technology, defense, and climate, as outlined in the joint “Vision 2035” roadmap, promises to foster advanced technology partnerships and start-up growth in both the UK and India's technology and education-and-self-development sectors.
- As part of the deal, the expansion of cooperation in technology will create a fertile ground for joint innovation in AI, data science, and other cutting-edge technologies, benefitting finance and business industries on both sides.
